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Rich Man's Revolutionary

Herman Cain’s proposals are truly radical. So radical that they would produce a massive windfall for the wealthy and significant hardship for the rest of us, says Michael Tomasky.

V.I. Lenin: Now there was a fellow who thought ahead. He had five-year plans and seven-year plans by the bushel-full, and he never lost faith in the dialectic. Marx and science had provided the proof that it would all work out. We need that kind of constancy and can-do spirit in America today, I think you’d agree. Well, friends, we have it—in Herman Cain. His now-famous 9-9-9 tax plan is certainly as radical as anything Lenin ever proposed, although in the opposite direction. And more than that, it turns out to be (like communism itself) merely a stage in man’s development on the way to nirvana. Maybe I have been underestimating him.

Cain now actually leads the field in some new polls. One seems like a dodgy poll, in that it shows Newt Gingrich at 15 percent, which I doubt is accurate even among his extended family. But another is Wall Street Journal/NBC. There’s no denying—Cain is riding the wave. He’s a nice feel-good candidate, an indulgence, an escape hatch from the disappointment of Rick Perry and the tedious (seeming) inevitably of Mitt Romney—and finally, a way for Tea Partiers to say, “See? We’re not racists!” In all those senses he has a lot going for him. But now his plan has started to face serious scrutiny, and that scrutiny is revealing that it’s undoubtedly the most radical shift of wealth that a presidential candidate has proposed in this country since (speaking of communists) Gus Hall.

Bruce Bartlett, the esteemed economist who is an apostate conservative but also not a liberal, recently sliced the plan to pieces. “A distributional monstrosity,” Bartlett wrote, under which “the poor would pay more while the rich would have their taxes cut, with no guarantee that economic growth will increase and good reason to believe that the budget deficit will increase.” We’ll get to a few details on that in a moment.

But what’s really startling about Bartlett’s report—and this is what got me thinking about Comrade Ulyanov—is that the 9-9-9 plan is not his goal. No—it’s merely Phase 2 in the melting away of the state! Phase 1 would reduce business and personal income taxes to a high rate of 25 percent. That sounds nice. But you have to know about concepts like marginalization to realize that 96 percent of all taxpayers don’t even make enough to pay a single dollar in income taxes at rates above 25 percent. So in other words, Cain cuts taxes—for the top 4 percent. And for the top 1 percent—especially the top 0.2 percent (millionaires)—he cuts them radically.

The same applies to Cain’s proposals for business taxes. Cain’s Phase 1, the way it’s structured, would cut taxes mostly for the largest corporations and not help small- and medium-size concerns that are 92 percent of businesses. And he’d abolish all taxes on capital gains. Two-thirds of all capital gains are reported by taxpayers with yearly incomes above $1 million.

Getting the picture? A massive Christmas gift for the well-off. And remember—that’s just Phase 1! The 9-9-9 plan is Phase 2, calling for a 9 percent rate for business taxes, personal income taxes, and a national sales tax. First of all, the numbers don’t add up. Either government services will be savaged or we’ll run an unthinkable deficit. And again, middle- and lower-income people will be crushed, even worse than under Phase 1. Most poor and many working-class people pay no income tax (they do, of course, pay payroll taxes). But under Cain’s plan, they would pay. And the wealthy would pay far, far, far less than they do now. Far, far, far less than George W. Bush ever dreamed of making them pay.

Cain would say: But I get rid of payroll taxes. Fine. That saves an average taxpayer about $3,000. But it also means there is no Social Security, since that is how Social Security is financed. So the taxpayer would probably plow most of that back into a private retirement account anyway. Then, she pays a 9 percent tax on everything she buys. What people buy, from food to entertainment to what have you, usually amounts to 60 percent or more of their income.

It’s no wonder that Cain’s chief economist, Rich Lowrie, is not an economist but a “wealth management” consultant. Cain entire plan is about benefitting the wealthy.

Ah, but if you think that’s a lot of sales tax, just wait till you hear about Phase 3. This last phase ends 9-9-9 and imposes a (get this name) “Fair Tax”—a 30 percent sales tax on all goods and services. The theory here is that prices will fall. Another part of the theory, which proponents don’t mention quite as often, is that wages would fall, too. And all that’s on top of spending $130 for a $100 pair of sneakers for your teenager, or $780 for a $600 television.

It’s no wonder that Cain’s chief economist, Rich Lowrie, isn’t even an economist but a “wealth management” consultant. The Cain plan is entirely about wealth management. And GOP primary voters love them some wealth management. This plan will surely help Cain in primary season.

So I do have to hand it to him. He understands the spirit of the age in some way. Be as radical and simplistic and unrealistic as possible, and lustily feed the haves’ hatred of the have nots. And be black while doing it—better still! And feed America pizza too! It’s a good thing for the world Lenin was never quite this clever.